STATE of the WEB

Just as some households still don’t have answering machines or microwave ovens, some print catalogers have yet to add a Website. Among the respondents to this year’s I.Merchant Electronic Marketing Survey, 16% did not market online — a scant decrease from last year’s 18%. Eighteen percent of the consumer marketers surveyed did not have a Web presence; ditto 13% of the business-to-business marketers.

Interestingly, the size of a company didn’t have much of a bearing on its likelihood of having an online presence: 20% of respondents with annual sales of less than $10 million did not have a Website, but neither did 16% of those with annual sales of at least $50 million.

Sales volume did influence the sort of Web presence a company has. For instance, not one respondent with annual sales of less than $10 million had a presence on America Online, compared with 5% of those with annual sales of $10 million-$49.9 million, and 13% of those with sales of at least $50 million. Similarly, while 17% of the respondents with sales of at least $50 million offered an online catalog on an Internet mall or co-op, only 7% of the smallest respondents did. (As for those companies in the middle, with annual sales of $10 million-$49.9 million, nearly 23% appeared on an Internet mall or co-op.)

One figure remained consistent regardless of company size: the percentage of respondents with an online presence that had their own Website. Among the smallest companies, 98% did, as did 98% of those with sales of $10 million-$49.9 million. Among the largest respondents, that percentage dropped a statistically insignificant two points, to 96%. Between consumer catalogers and b-to-bers, the percentage was the same: 97%.

AOL became a more popular alternative during the past year, judging by our respondents. Overall, 7% of this year’s participants had a presence on AOL, up from less than 2% of last year’s. And while last year not one b-to-b respondent was on AOL, nearly 5% of this year’s were.

Getting the job done

The popularity of outsourcing the design of an online catalog increased somewhat as well. Forty-four percent of this year’s respondents outsourced design, compared with 40% of last year’s. Consumer marketers were more likely to outsource design than b-to-bers: 49% vs. 38%.

One function that was outsourced by the overwhelming majority of i.merchants was hosting the server. Eighty-three percent of all respondents had an outside firm host their server, down seven percentage points from last year’s 90%. Not surprisingly, the smallest companies were most likely to leave the server hosting — an expensive proposition — to an outside firm: 90% of respondents with sales of less than $10 million outsourced server hosting, compared with 77% of those with sales of $10 million-$49.9 million, and 82% of those with sales of at least $50 million.

The pattern varies somewhat for the outsourcing of back-end operations, including fulfillment. Only 11% of respondents with sales of more than $50 million outsourced that function, compared with 18% of those with sales of less than $10 million. But of i.merchants with annual sales falling in the middle range, the percentage increased to 23%.

During the past year, more marketers came to realize that maintaining a Website requires maintaining at least one staffer dedicated to the site. Whereas last year 29% of respondents did not have even one employee working full-time on the Website, this year every respondent with an online presence employed at least one full-timer to work exclusively on the Web. More than half of the respondents (51%) employed two to four full-timers to work on their site; another 34% paid at least five employees to work exclusively on the Website. Fifteen percent of respondents — including 36% of those with sales of less than $10 million, but only 3% of those with sales of at least $50 million — employed just one full-time Web staffer.

Spending patterns

During the past year, marketers really took the saying “it takes money to make money” to heart. The mean amount that respondents spent annually on managing their sites — and that includes salaries, order fulfillment, and promotions in addition to site maintenance — was $117,004. That’s a leap of 168% from the mean $43,600 spent by last year’s respondents.

None of the respondents with sales of at least $50 million spent less than $10,000 a year on their sites. In fact, 52% spent more than $250,000. Conversely, and not surprisingly, none of the i.merchants with sales of less than $10 million spent that much on their sites. But 11% of these smallest respondents spent $100,001-$250,000 on their Web efforts, compared with 22% of the largest respondents. Among those with annual sales of $10 million-$49.9 million, 10% spent more than $250,000, and another 23% spent $100,001-$250,000.

Promotional tools used

2001 2000
Print catalogs 78% 71%
E-mail 72% 59%
Search engines 64% 77%
Print ads 50% 63%
Direct mail (noncatalog) 37% 36%
Links with vendors 37% 54%
Banner ads on other sites 36% 34%
Phone reps 34% 21%

Consumer respondents spent on average nearly 30% more on their sites than did their b-to-b counterparts. The mean annual costs among the consumer i.merchants was $131,184, compared with $101,330 among the business marketers.

As for the percentage of their total budget that respondents allocated to their Web presence, the mean this year was 8.0%, down from last year’s 9.3%. Consumer respondents spent a mean 9.0% of their budget on their Web operations; b-to-bers, 7.0%.

The plurality of respondents — 32% — spent just 1%-3% of their budget on their Website. If you subtract the 28% of respondents who admitted that they didn’t know how much they spent, however, the figure jumped to 44%. Again discounting the “don’t knows,” 23% of respondents spent 4%-6% of their total budget to their Websites; 13% spent 7%-10% of their total budget; 12% spent 11%-15%; 4% spent 16%-20%; and 3% spent more than 20% of their total budget on their Web business.

Tools of the trade

Of the tools available to promote Websites, a company’s own catalog was the most widely used. Seventy-eight percent of respondents — including 88% of b-to-bers and 73% of consumer mailers — promoted their Websites in their books. (Given that this is such an inexpensive and easy option, the only surprise is that not every participant did so.)

E-mail was the second-most-popular promotional vehicle, with 72% of i.merchants availing themselves of it. Consumer marketers were more likely to use promotional e-mails than b-to-bers: 76% of the former sent them, compared with 65% of the latter. The use of banner ads on other Websites follows a similar pattern, with 40% of consumer i.merchants using them vs. 28% of the b-to-bers.

On the other hand, 60% of b-to-b respondents promoted their sites with print advertising vs. 47% of the consumer marketers. And while 52% of the b-to-bers sent direct mail promotions (other than their catalogs) to tout their sites, only 26% of the consumer i.merchants did.

As for the tools that respondents used on their sites, 85% offer secure-socket connections (SSCs) for credit-card purchases — a figure that held steady from the previous year. An impressive 94% of the consumer marketers had SSCs, compared with a disappointing 72% of the business-to-business respondents. Another 13% of the b-to-bers accepted credit-card transactions via an open line (as did 1% of the consumer i.merchants). But while only 5% of the consumer participants did not accept online orders at all, among the b-to-bers that figure climbed to 15%.

“Do you sell banner ads on your site?”

2001 2000
Yes 7% 9%
No, but we are considering it 15% 20%
No, and we have no plans to 78% 71%

Who’s using session analysis

Consumer respondents 57%
B-to-b respondents 46%
Respondents with sales of less than $10 million 31%
Respondents with sales of $10 million-$49.9 million 59%
Respondents with sales of at least $50 million 61%

Who’s liquidating overstock on the Website

Consumer respondents 71%
B-to-b respondents 52%
Respondents with sales of less than $10 million 58%
Respondents with sales of $10 million-$49.9 million 72%
Respondents with sales of at least $50 million 62%

As was to be expected, the smaller i.merchants were more likely not to accept online orders than their larger peers. Among respondents with annual sales of less than $10 million, 20% did not accept Web orders. But among respondents with sales of $10 million-$49.9 million, that figure dropped to 8%, and among those with sales of at least $50 million, it dipped even lower, to 3%.

Just as 85% of total respondents provided online secure-socket ordering, 84% sent customers an e-mail confirmation of their order. Automatic calculation of shipping and handling fees and sales tax was less common: Two-thirds of respondents offered it, including 72% of the consumer marketers but only 59% of the b-to-bers.

There was also a disparity between the number of consumer marketers and b-to-bers offering real-time stock availability. Forty-two percent of the consumer i.merchants provided the information, but just one-fourth of the b-to-b respondents did. The percentage of b-to-bers offering online order tracking, however, was nearly the same as that of consumer marketers: 39% vs. 38%.

Sherry Chiger is editorial director of Catalog Age and I.Merchant. Shayn Ferriolo, special projects manager of Catalog Age, prepared the chart data.

METHODOLOGY

In February 2001, Intertec Planning and Research e-mailed invitations to 1,000 Catalog Age subscribers chosen on an nth-name basis. Each e-mail contained an embedded URL linking the respondent to the Website where the survey was located. Of the 1,000 e-mail recipients, 197 completed the survey, resulting in an effective response rate of nearly 20%.

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